Learning Technology Partners v. University of the Incarnate Word

Filing 116

Final pretrial order. Signed by Judge Hamilton on 12/18/2015. (pjhlc2, COURT STAFF) (Filed on 12/18/2015)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 LEARNING TECHNOLOGY PARTNERS, Case No. 14-cv-4322-PJH Plaintiff, 9 FINAL PRETRIAL ORDER v. 10 United States District Court Northern District of California 11 UNIVERSITY OF THE INCARNATE WORD, Defendant. 12 13 14 Pursuant to Rule 16(e) of the Federal Rules of Civil Procedure, this final pretrial 15 16 order is hereby entered and shall control the course of the trial unless modified by a 17 subsequent order. 18 I. MOTIONS IN LIMINE 19 A. 20 Plaintiff’s first motion in limine to exclude evidence regarding the number of 21 Plaintiffs’ Motion in Limine No. 1 students using services in breach of the exclusivity provision is DENIED. 22 B. 23 Plaintiff’s second motion in limine to exclude evidence of the 3-5% discount sought 24 Plaintiff’s Motion in Limine No. 2 in connection with defendant’s counterclaim is DENIED. 25 C. 26 Plaintiff’s third motion in limine to exclude evidence of plaintiff’s revenue and profit 27 28 Plaintiff’s Motion in Limine No. 3 unrelated to defendant is GRANTED. 1 D. Plaintiff’s Motion in Limine No. 4 2 Plaintiff’s fourth motion in limine to exclude the testimony of defendant’s expert 3 Jason Frankovitz is GRANTED in part and DENIED in part. The parties agree that two 4 out of the three topics covered by the Frankovitz report (specifically, the issue of whether 5 plaintiff’s own actions contributed to any usage/capacity issues, and the issue of 6 derivative work) are no longer relevant to any claims at issue. Thus, to the extent that 7 plaintiff seeks to exclude those portions of the report, the motion is GRANTED. However, 8 the parties also agree that the third topic covered by the Frankovitz report (whether 9 plaintiff could have discovered or prevented defendant’s alleged breach) could be relevant to at least some of defendant’s affirmative defenses, and thus, the motion to 11 United States District Court Northern District of California 10 exclude that portion of the report is DENIED. 12 E. Plaintiff’s Motion in Limine No. 5 13 Plaintiff’s fifth motion in limine seeks to preclude cross-examination of Reda 14 Athanasios regarding claimed damages arising from labor costs, which are no longer 15 sought in the case. Because Athanasios’ credibility is relevant to other categories of 16 claimed damages, plaintiff’s fifth motion in limine is DENIED. 17 F. Defendant’s Motion in Limine No. 1 18 Defendant’ first motion in limine to preclude plaintiff’s damages expert from 19 presenting calculations not disclosed in his expert report is GRANTED in part and 20 DENIED in part. Plaintiff’s expert shall be permitted to offer modified versions of the 21 calculations already contained in the report (for instance, damages for a limited temporal 22 scope), but may not offer calculations based on new damages theories. 23 G. Defendant’s Motion in Limine No. 2 24 Defendant’s second motion in limine to preclude plaintiff from offering testimony 25 regarding defendant’s document retention policy or regarding allegations of 26 lost/destroyed documents is GRANTED. 27 H. Defendant’s Motion in Limine No. 3 28 Defendant’s third motion in limine to admonish Reda Athanasios regarding the 2 1 personal knowledge evidentiary requirement is DENIED. 2 I. Defendant’s Motion in Limine No. 4 3 Defendant’s fourth motion in limine to preclude plaintiff from presenting evidence 4 or argument that other clients were charged “standard rates” is GRANTED, based on 5 plaintiff’s inability to identify any such evidence that was produced during discovery. 6 J. Defendant’s Motion in Limine No. 5 7 Defendant’s fifth motion in limine to preclude plaintiff from offering “improper 8 character testimony regarding Dr. and Mr. Porter” is GRANTED in part and DENIED in 9 part. The motion is granted only to the extent that defendant seeks to preclude evidence related to Dr. Porter’s alleged mishandling of expenses during previous employment. 11 United States District Court Northern District of California 10 Any other character evidence-related issues will be resolved by the court as they arise. 12 K. 13 Defendant’s sixth motion in limine to preclude evidence related to its own profits is 14 Defendant’s Motion in Limine No. 6 GRANTED, for the same reasons as plaintiff’s third motion in limine was granted. 15 L. Defendant’s Motion in Limine No. 7 16 Defendant’s seventh motion in limine to preclude plaintiff from presenting evidence 17 or argument relating to usage/capacity issues is GRANTED in part and DENIED in part. 18 As mentioned above (in the context of plaintiff’s fourth motion in limine), plaintiff’s 19 knowledge of the usage/capacity issues could be relevant to defendant’s affirmative 20 defenses, so to the extent that plaintiff seeks to introduce evidence for that purpose, the 21 motion is DENIED. However, to the extent that plaintiff seeks to introduce the evidence 22 for any other purpose (including any alleged damages stemming from the usage/capacity 23 issues), the motion is GRANTED. 24 II. 25 26 DEFENDANT’S DAUBERT MOTION Defendant seeks to exclude the testimony of plaintiff’s damages expert, Mark Cohen. 27 A. Legal Standard 28 Federal Rule of Evidence 702 permits experts qualified by “knowledge, 3 1 experience, skill, expertise, training, or education” to testify “in the form of an opinion or 2 otherwise” based on “scientific, technical, or other specialized knowledge” if that 3 knowledge will “assist the trier of fact to understand the evidence or to determine a fact in 4 issue.” Fed. R. Evid. 702. 5 The proponent of expert testimony bears the burden of establishing by a 6 preponderance of the evidence that the admissibility requirements are met. See Fed. R. 7 Evid. 702, Advisory Committee Notes. Although there is a presumption of admissibility, 8 Daubert v. Merrell Dow Pharms., Inc., (“Daubert I”) 509 U.S. 579, 588 (1993), the trial 9 court is obliged to act as a “gatekeeper” with regard to the admission of expert scientific 10 United States District Court Northern District of California 11 testimony under Rule 702. Id. at 597. Daubert requires a two-part analysis. First, the court must determine whether an 12 expert's testimony reflects “scientific knowledge,” whether the findings are “derived by the 13 scientific method,” and whether the work product is “good science” - in other words, 14 whether the testimony is reliable and trustworthy. Id. at 590 & n.9, 593. Second, the 15 court must determine whether the testimony is “relevant to the task at hand.” Id. at 597. 16 B. Legal Analysis 17 In general, as discussed at the pretrial conference, the court finds that many of the 18 arguments raised by defendant in this motion relate more to the legal theories and the 19 evidence underlying Mr. Cohen’s report, than to the methodology used in the report. As 20 a result, the court construes the Daubert motion more as a motion in limine rather than as 21 a true Daubert motion. And because both parties had a full opportunity to brief the issues 22 raised in the motion, and had an opportunity to present further argument at the pretrial 23 conference, the court is prepared to make the following evidentiary rulings based on the 24 arguments presented by the parties. 25 First, defendant seeks to preclude Mr. Cohen from opining that the 60% discount 26 applied to fees that were waived pursuant to the parties’ contract. The language of the 27 contract supports defendant’s argument, as it provides as follows: 28 4 1 2 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LTP Exclusivity. Client acknowledges and agrees that LTP will incur significant costs in initializing the relationship with Client, including initial setup fees and custom work charges. In addition, LTP is providing a discount exceeding sixty percent (60%) of its standard fees. As a consideration for LTP agreeing to waive its setup fees and custom work charges, and providing such discount, Client agrees that for the term of this Agreement LTP shall be Client’s sole and exclusive provider for all distance education Content Management Systems or Learning Management Systems. Dkt. 1, Ex. 1 at 5. The provision first states that plaintiff will incur significant initialization costs, then sets forth the discount to its standard fees, and then provides that, in exchange for exclusivity, plaintiff will “waive its setup fees and custom work charges, and provid[e] such discount” (emphasis added). Thus, the fee waiver is separate from the discount, and while plaintiff may seek reimbursement of the waived fees, it may not seek a refund of any alleged discount applied to those amounts. The second, related issue also arises out of the same provision. Mr. Cohen’s report opines that certain fees for work performed over the life of the contract were waived, and thus should be included in any calculation of exclusivity-related damages. However, the exclusivity provision is clear in stating that the waiver applies to costs incurred “in initializing the relationship” with defendant (emphasis added). Thus, while plaintiff may seek reimbursement of fees incurred in “initializing” the services provided to defendant, it may not seek reimbursement of all waived fees. The third issue first arose in plaintiff’s opposition to defendant’s Daubert motion, and relates to the timeframe for which damages are sought. Plaintiff states that it now “plans to only seek repayment of discounts for fees invoiced after the first breach of the exclusivity provision,” but now claims that the first breach may have occurred well before the date identified in its interrogatory responses. Dkt. 105 at 4. Specifically, in response to an interrogatory asking plaintiff to identify all facts related to the alleged exclusivity breach, plaintiff responded that “the breach began no later than 2013.” Dkt. 83-2, Ex. F at 7. Plaintiff now claims that, while deposing one of defendant’s witnesses, it learned 5 1 that the first breach may have occurred as early as 2010, or even earlier. However, 2 plaintiff never supplemented its discovery responses to reflect its new theory regarding 3 the initial breach, nor did it mention any pre-2013 breach in opposition to defendant’s 4 motion for summary judgment. See Dkt. 52 at 7-8 (alleging exclusivity breaches in 2013 5 and 2014, but no earlier). Plaintiff is not permitted to change its theory of the case on the 6 eve of trial, and thus, plaintiff is precluded from alleging any exclusivity breach prior to 7 2013. 8 9 Fourth, defendant seeks to preclude Mr. Cohen from offering testimony that plaintiff is entitled to prejudgment interest. The court first finds that the contract is silent as to the amount of interest in the case of disputed payments. Defendant argues that 11 United States District Court Northern District of California 10 such silence indicates that interest is precluded, but the court disagrees. Instead, the 12 applicable rule comes from California Civil Code section 3287, which provides for a 10% 13 interest rate, but has been interpreted by the courts to apply only where the damages are 14 “capable of being made certain by calculation.” And the test for determining “certainty” is 15 “whether the defendant actually knows the amount owed or could have computed the 16 amount from reasonably available information.” 17 As applied to this case, the sheer number of legitimate factual disputes prevents 18 the court from finding that either party actually knew the amount owed or could have 19 computed the amount from reasonably available information. Thus, plaintiff is precluded 20 from presenting testimony regarding prejudgment interest. 21 For the foregoing reasons, defendant’s motion is GRANTED in part and DENIED 22 in part. To the extent that defendant’s motion seeks any relief other than that stated 23 above, it is denied. In particular, the court notes that defendant’s motion re-asserts an 24 argument made in its motion for partial summary judgment – that plaintiff is not entitled to 25 a refund of the 60% discount provided in the parties’ contract. The court rejected that 26 argument during summary judgment, and finds no basis to revisit it here (though it does 27 clarify, as it did at the pretrial conference, that the court has not accepted plaintiff’s 28 damages theory – it merely found that the issue may be presented to the jury). 6 Finally, at the pretrial conference, the court noted that both parties concede that 1 2 some of the calculations in the Cohen report may be inaccurate – either because 3 incorrect rates were used by Mr. Cohen, or because the underlying invoices reflected 4 incorrect rates. As discussed at the conference, the parties are to meet and confer 5 regarding these miscalculations and submit a stipulation regarding the correction of any 6 incorrect figures. 7 III. VOIR DIRE As discussed at the pretrial conference, the court will include joint questions 2, 3, 8 8 and 9 (to be combined into one question), 13 and 14 (to be combined), 15, 16, and 17 10 and 18 (to be combined) in its jury questionnaire. The court will also include plaintiff’s 11 United States District Court Northern District of California 9 proposed questions 3 and 4. The parties shall submit a joint filing, containing all revised 12 voir dire questions, by January 15, 2016. 13 IV. JURY INSTRUCTIONS 14 At the pretrial conference, the court addressed a subset of the jury instructions, but 15 deferred a determination of the remaining instructions until after the parties’ supplemental 16 briefing regarding affirmative defenses (which will be more fully discussed below). 17 Specifically, the court indicated that it would not allow plaintiff’s proposed instruction 1.15 18 (questions to witnesses by jurors), 4.1 (corporations and partnerships), 316 19 (interpretation – meaning of technical words), but would allow plaintiff’s proposed 20 instruction 312 (substantial performance). Regarding defendant’s proposed instructions, 21 the court indicated that it was unlikely to allow instructions that were based only on case 22 law. The court will re-address this issue after the parties submit supplemental briefing. 23 V. VERDICT FORM As with the jury instructions, the court defers a determination on the verdict form 24 25 until it receives further briefing regarding the asserted affirmative defenses. 26 VI. TRIAL SCHEDULE AND TIME LIMITS 27 The duration of the trial shall be 5 days (Monday, Tuesday, Thursday, and Friday, 28 from 8:30 a.m. to 1:30 p.m., with two 15-minute breaks). Jury selection will occur on the 7 1 firs day, as will opening statements (time perm st w s mitting). Du uring the re emaining fo days, our 2 each side sha have 9 hours to pre all esent their c case. Closi argume ing ents, final ju ury 3 structions, and delibera a ations are not included within the 5-day trial allotment. n d e l ins 4 VII I. As mentioned abo ove, the parties are to submit the revised vo dire ques e oir stions by 5 6 FINAL COMMENTS January 15, 2016. 2 The pa arties shall also submit briefing on issues of (1) the app a t n plicability of a f 7 8 f se, ability of the asserted a e affirmative d defenses in n comparative fault defens and (2) the applica 9 her e ded y he general, including wheth they are to be decid by the court or by a jury. Th parties e rected to av void affirma ative defens that are duplicative or that lar ses e e rgely are further dir 11 United States District Court Northern District of California 10 ove erlap with each other. Each party may subm a supple e mit emental bri not to e ief, exceed ten 12 (10 pages, no later than January 15, 2016. E 0) n 1 Each party may also s submit a res sponse, not t 13 to exceed ten (10) pages by Janua 22, 201 No repl n s, ary 16. lies are per rmitted. Finally, the court notes one potential po of confu p oint usion that a arose during the g 14 15 pre etrial confer rence. Plai intiff appeared to indic cate that pa of its dam art mages calc culation 16 ste emmed from lost reven caused by the alle m nue d eged capac city/usage is ssues. Alth hough the 17 cou is unclear as to wh urt hether plaintiff actually intends to pursue this theory, to avoid any s 18 confusion, the court will hold plaintiff to the rep e presentation made in t joint pre the etrial 19 sta atement tha it “will not present an evidence regarding alleged ge at t ny e g eneral busin ness losses s 20 (e.g., the alleg 120 inq ged quiries LTP received a was unable or unw P and willing to res spond to 21 wh address hile sing server and capacity issues a Mr. Athanasios’ es and stimate of th number he 22 of clients LTP would hav acquired had LTP fo P ve ollowed up on those in nquiries).” Dkt. 87 at 23 7. 24 IT IS SO ORDER S RED. 25 Da ated: December 18, 20 015 26 27 __ __________ __________ __________ _______ PH HYLLIS J. H HAMILTON Un nited States District Ju s udge 28 8

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